From the Ground Up - The Fiscal Cliff and Agriculture

The Farm Bill that was in effect for last year was set to expire at the end of 2012, and no new bill has been passed; however, when the fiscal cliff deal was made, the issue was addressed...sort of.

“Right now our dairymen get a $9.90 support level where they don’t have to take less than that for their milk, and the products made from milk basically. Automatically is was going to go to $38 on January 2nd, and when that happened, you would have complete destruction of demand, meaning that if you pass a $38 milk price through the products everything would be a lot more expensive, and it’s not something where people would say we’ll just buy less of it. By law the government would be buying it and putting it in storage, so yes the consumers wouldn’t buy any of it, but it would be all bought by the government at that very high level and put into storage.”

Ag economist Joe Outlaw says the fiscal cliff deal fixed the problem by extending the farm bill policy to what it was back in 2012, but that deal was temporary.

“It fixed it from January. It’s going to be back with us in March, so the big deal will be this. The same people who had problems figuring out how to fix the fiscal cliff are going to have to sequestration problems, because automatic across the board cuts come back March 1st. Sometime before March 1st we’re going to hit the debt limit, the U.S. debt limit and usually when we hit those mile stones is when things get changed.”

Dr. Outlaw isn’t convinced programs will be the same as they were last year.

“Until we have a sign-up that says producers from Brazos county go sign up with the farm Services Agency, this is going to be your program for this year, until that happens, there’s always a chance that they could change the policy mid-stream, and the support could be much different than what they think it’s going to be right now.”

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